Taxpayers Missing Among Supporters Behind Gas Tax Increase

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April 17, 2013

Tuesday, the House Transportation and Infrastructure Committee held hearings on three bills: House Bill 4358, 4359, and 4539. Supporters of increasing taxes and fees on Michigan residents were out in plenty; suit after suit appeared to testify in support of raising an additional $1.4-1.6 billion dollars in order to “Fix the Roads.”

Not one single lawmaker on the committee stood up for taxpayers and families who are already paying more in federal and state taxes this year because lawmakers at both levels of government decided to raise taxes. Lawmakers on the committee didn’t disagree over whether to raise taxes, but how to raise taxes.

Rep. Wayne Schmidt, Chair of the House Transportation and Infrastructure Committee

The din from special interests on this issue is deafening. Lawmakers are debating various tax hike proposals amidst a chorus of special interests. According to a report by the Michigan Campaign Finance Network, Lansing lobbyists reported record spending in 2012 of $37.14 million–up by 4.8 percent compared to $35.44 million reported in 2011. Everyone benefits from wealth created by a flourishing private sector; however, only well-connected interest groups benefit when lawmakers take money from taxpayers and divvy it up.

Here is a quick breakdown of the proposed legislation:

HB 4358, 4359

Currently, the state levies a 19-cent per gallon tax on gasoline and a 15-cent per gallon tax on diesel fuel. House bills 4358 and 4359 would instead tax gasoline as a percentage of the wholesale price, meaning the tax would fluctuate as the wholesale price of fuel fluctuates. The proposed tax rate per gallon would be 12% of the wholesale price of gasoline (as calculated by the Michigan Department of Treasury).

The House Fiscal Agency (HFA) estimates the current 19-cents per gallon gasoline excise tax will generate $812.5 million in fiscal year 2013-14; HFA estimates the 15-cents per gallon diesel motor fuel tax rate will generate $130 million. Estimates based on a $3.50 per gallon price of gasoline suggest that moving to a wholesale tax structure would generate an additional $584.7 million annually, or $1.527 billion in total state restricted transportation revenue. Estimates based on $4.00 per gallon would generate an additional $828.8 million annually, or $1.771 billion in total. This tax change does not reach the goal of increasing revenue by $1.4 billion so according to lawmakers other tax or fee increases would still be needed and are being discussed.

HB 4539

Just as food is exempted from the state sales tax, House Bill 4539 would exempt gasoline and diesel fuel sales from sales tax. According to MLive, Michigan is one of eight states that levies a sales tax on fuel purchases; Michigan does not devote any of that revenue to road maintenance or repairs. Taken alone, this legislation is a good idea. It would allow lawmakers to increase gas taxes in a revenue neutral way so that all money spent at the pump is used for road maintenance or repairs. Unfortunately, if lawmakers approve such a measure, they are only likely to do so if other bills representing a net tax hike are approved.

Photo credit: MLive

But what about the missing sales tax revenue that is dedicated mostly to education and local government revenue sharing? How about reducing areas of waste in the budget like the 21st Centry jobs fund or ending the Hollywood film subsidies? Nope. Lawmakers have discussed the idea of allowing voters to increase the sales tax by 1% (or 2% as originally proposed in the Senate) to make up for this lost revenue.

State lawmakers need to understand that it is unconscionable to raise taxes when Michigan families have already been paying more this year in federal and state taxes, often with lower incomes and less working hours.

If the goal is to hinder Michigan’s economic growth, they are succeeding. Michigan lawmakers must prioritize spending and remember that money spent in the private sector drives economic growth and increases prosperity. If roads are a priority, make them one without raising taxes. Michigan families deserve a government that works for them, not wealthy lobbyists in Lansing.

Representative Wayne Schmidt told reporters after committee that he still plans to have a plan in place by the first week of May. Sign the “Don’t raise Michigan Taxes… again” petition. It is important tell your lawmakers that you want spending priorities, not more tax increases.

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Key Votes

I am writing in support of SB 1033, sponsored by Sen. Patrick Colbeck (R-Canton), which clarifies the Michigan Insurance Code to ensure direct primary care agreements are not fettered by the thicket of regulations that currently apply to health insurance products.

I urge you to oppose the tentative road-funding plan hammered out by political leaders today. Based on the limited information made available about this plan, it appears this package of bills would raise taxes on the middle-class by more than $1.8 billion.